3 REITs to Buy if You Think Life Will Return to Normal in 2021

RioCan REIT, InterRent REIT, and Boardwalk REIT could be excellent investments if you think life will return to normal this year.

| More on:
edit Real Estate Investment Trust REIT on double exsposure business background.

Image source: Getty Images

General investor morale has been better since the rollout of the COVID-19 vaccine was announced late last year. The housing market has been touted to see a major correction this year amid rising prices, despite weak economic conditions due to the pandemic.

Real estate investment trusts (REITs) gave investors a real scare during the pandemic, since many retailers had to shut down their stores due to the lockdowns designed to curb the spread of the virus.

The possibility of a significant housing market crash is still there. I discussed the REITs you could consider investing in if there is a housing market correction. However, there is also a general sentiment that things will return to normal soon.

Today, I will discuss three REITs that you should consider if you think life will return to normal.

RioCan REIT

RioCan REIT (TSX:REI.UN) is one of the most important REITs you can consider for this purpose. The retail REIT suffered substantial cash flow losses due to the lockdowns, as many of its tenants were forced to scale down or shutter operations. The REIT had started diversifying away from retail real estate by investing in intensification projects before the pandemic struck.

Almost 90% of its portfolio was in the retail sector and 8% in office real estate. Both real estate segments took a hit during the pandemic. However, RioCan still managed to pay almost $452.3 million in dividends in the trailing 12 months. Based on its Q3 earnings report, 97% of its gross rent was still safe.

Things going back to normal can provide the REIT with a significant return of its regular cash flow, providing you with excellent returns through its monthly payouts.

InterRent REIT

InterRent REIT (TSX:IIP.UN) is another ideal REIT to consider if you think that life will return to normal this year. Considering the performance it has had over the last several years, it is difficult to imagine that it is a real estate stock. The company specializes in acquiring older buildings that need repairs. It then renovates them, increases their value for unitholders, and charges more on new leases.

The company has provided over 1,000% in total returns to its unitholders. Before the pandemic struck and the Canadian growth stock’s decline, InterRent’s return was roughly almost 1,600% for its shareholders. If the economy can recover soon and nothing horrible comes to pass with the housing market, InterRent could continue providing massive returns to its unitholders.

Boardwalk REIT

Boardwalk REIT (TSX:BEI.UN) is another high-quality opportunity for real estate-centric investors to consider adding to their portfolios if they think life will return to normal. The residential REIT was heavily sold off due to its portfolio concentration in Alberta. As oil markets and the pandemic affecting the energy sector, Alberta residents suffered the brunt of the economic impact.

Boardwalk dramatically underperformed under the conditions. However, it can be a high-quality investment for savvier investors who view the REIT as a value opportunity. The company’s growth investment project remained on track during 2020. As economic activity improves when things become normal, the REIT could see a significant improvement in its cash flows and valuation.

Foolish takeaway

There may be a general sense of positivity these days as 2021 continues. It remains to be seen whether life will return to normal. In case things begin improving drastically, RioCan, InterRent, and Boardwalk are three excellent REITs you can consider adding to your portfolio for phenomenal returns.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned.

More on Dividend Stocks

Arrowings ascending on a chalkboard
Dividend Stocks

3 TSX Stocks With Dividends That Outpace Inflation

Investors that worry about losing buying power due to inflation could put money into these three stocks! They’re known for…

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

Dividend Seekers: Which of These 3 TSX Energy Stocks Is a Better Buy?

Which is a better bet among TSX energy bigwigs?

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

3 Top Value Stocks to Buy in December 2022

Stocks such as Bank of Montreal and NFI Group are trading at attractive and cheap valuations in 2022.

Read more »

Dividend Stocks

1 Oversold Dividend Stock I’d Buy in December 2022

Here’s one of the best Canadian dividend stocks to buy in December that I find undervalued.

Read more »

Make a choice, path to success, sign
Dividend Stocks

Algonquin Power Stock: Time to Buy or Buyer Beware?

Algonquin Power stock has a massive 9.5% dividend yield. It looks appealing, but is it time to buy or beware?

Read more »

TFSA and coins
Dividend Stocks

2 Top TSX Stocks to Buy Now for TFSA Passive Income

Stocks with good dividend growth are now on sale for investors seeking passive income.

Read more »

Dividend Stocks

2 TSX Stocks to Buy in December for Passive Income

These two TSX dividend stocks are some of the best to buy today and can offer years of growing passive…

Read more »

Increasing yield
Dividend Stocks

2 High-Yield Dividend Stocks You Could Hold for Years

You can consider adding these two large-cap Canadian dividend stocks to your portfolio now to hold for the long term.

Read more »